MEXICO CITY, Nov 5 (Reuters) - Leading economies in the Group of 20 will make sure they do not tighten budgets so quickly as to hurt growth, according to a draft communique drawn up for top G20 finance officials meeting on Monday.
Here are some highlights from the draft communique that was read out by a G20 official:
“Global growth remains modest and downside risks are still elevated, including due to possible delays in the complex implementation of recent policy announcements in Europe, a potential sharp fiscal tightening in the United States, securing funding for this year’s budget in Japan, weaker growth in some emerging markets.”
“We will ensure our public finances are on a sustainable path, in line with the medium-term Toronto commitments in the case of advanced economies. We will ensure the pace of fiscal consolidation is appropriate to support growth.”
”In Japan, further progress in medium-term fiscal consolidation is needed.
By the next summit, advanced economies agree to identify credible and ambitious country-specific targets for the debt to GDP ratio beyond 2016, where these do not currently exist, accompanied by clear strategies and timetables to achieve them.”
U.S. “FISCAL CLIFF”:
The United States will carefully calibrate the pace of fiscal tightening to ensure that public finances are placed on a sustainable long-term path while avoiding a sharp fiscal contraction in 2013.”
“In this regard, we reiterate our commitments to move rapidly toward more market determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, avoid persistent exchange rate misalignments, and refrain from competitive devaluation of currencies.”
“We reiterate that excess volatility of financial flows and disorderly movements in exchange rates have diverse implications for economic and financial stability.”
”We remain committed to the full, timely and consistent implementation of the financial regulation agenda and discussed the latest FSB reports on the progress and implementation of agreed reforms. We endorse the conclusions and recommendations of the fourth progress report on the implementation of the G20 commitments to OTC derivative reforms and the BCBS report on the implementation of Basel III.
We agree to put in place a legislation and regulation for OTC derivative reforms promptly and act by end-2012 to identify and address conflicts, inconsistencies and gaps in our respective national frameworks including in the cross-border application of rules.
We agree to take the measures needed to ensure full timely, and effective implementation of Basel 2, 2.5 and 3, and its consistency with the internationally agreed standards.
We look forward to receiving for our spring meeting the BCBS (Basel Committee on Banking Supervision) report on the consistency of measurement of risk-weighted assets. We endorse a charter for the regulatory oversight committee which will act as the governance body for the global legal entity identifier system to be launched in March 2013.”